Hasnain Malik, Telemer, Dubai:
“It is a major disappointment for investors hoping for a victory for opposition candidate (Kemal) Kılıçdaroğlu and his promise to reverse conservative economic policy; a hope reinforced by the return of rival centrist candidate Ines on 11 May.
“For the Bulls on Turkish Assets, expectations have quickly shifted from a possible outright win for Kılıçdaroğlu in the first round to, at best, a divided government should it win in round two, given that Erdogan’s People’s Alliance won a majority in parliament.” Have secured a majority, and, in the worst case, another mandate for ergonomics.
“Without any change in conservative economic policy, which would entail painful corrective steps of its own in the short term, the case for investing in Turkish local currency assets remains mired in the debate as to whether the devaluation is sufficient to reflect market-unfriendly interest rate policy.” Yes or No. “
Onur Muminoglu, Credit Suisse, Istanbul:
“Markets read: No clear outcome from presidential vote this morning, pending macro/political uncertainty likely for next two weeks (at least).
“While this is a highly top-down macro factor relevant to a large number of industries, we note that more domestically oriented sectors, such as banks, retailers or large-cap diversified conglomerates … Political developments, while investors can monitor FX:Lira trends for industrial exporters.”